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© 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 40 11.12 Account Forfeiture. (a) Grace Period. If selected in the Adoption Agreement, the Grace Period shall apply to this Optional Benefit as described herein. (1) Length. For purposes of determining whether an expense may be reimbursed from a Participant’s Account, an expense incurred prior to the fifteenth day of the third calendar month following the close of the Plan Year (or such other date provided in the Adoption Agreement) shall be deemed to have been incurred for purposes of both the preceding Plan Year and the current Plan Year. Such period of time shall be referred to as the “Grace Period.” (2) Processing of Claims. Claims incurred during the Grace Period, and submitted prior to the close of the Claims Run-Out Period, shall be first allocated to and reimbursed from the Participant's Account for the preceding Plan Year until such Account is exhausted. Thereafter, any such claims shall be allocated to and reimbursed from the Participant’s Account for the current Plan Year. Claims incurred during the Grace Period will be allocated based upon the date the claim is received. Once a claim is allocated, there shall be no changes, modifications, or adjustments to the allocation of the account. In accordance with thi s part (1), a claim incurred during the preceding Plan Year and submitted during the Claims Run-out Period will be processed subsequent to a previously submitted claim incurred during the Grace Period, even if the account from the preceding Plan Year is exhausted by reimbursement of the claim incurred during the Grace Period. (3) Elections. No adjustment to a Participant’s election for the current Plan Year shall be made or allowed based upon the amount of claims reimbursed from the prior Plan Year’s account in accordance with part (1) hereof. (b) Carryover. If selected in the Adoption Agreement, a limited carryover of Account balances from Plan Year to Plan Year will be provided in accordance with the following conditions and restrictions: (1) The amount that may be carried over is limited to the lesser of (i) the amount specified in the Adoption Agreement, or (ii) the balance of the Participant’s Account. (2) The balance of a Participant’s Account available for the carryover shall be determined upon expiration of the Claims Run-out Period. Notwithstanding the foregoing, the balance of the Participant’s Account as of midnight on the last day of the Plan Year, up to the amount specified in paragraph (1) above, shall be available to reimburse Medical Expenses incurred on and after the first day of the new Plan Year. The Claims Administrator will administer claims sub mitted during the Claim Run-out Period (including allocating claims between the Participant’s carryover balance and the Participant’s election for the new Plan Year (if any)) in a manner consistent with applicable law (including regulatory guidance). For purposes of this paragraph, the balance of a Participant’s Account at any point in time shall be equal to the amount credited to the Account for the Plan Year minus claims paid to date with respect to that Plan Year. (3) In general, a carryover made in accordance herewith shall occur within the Health Flexible Spending Account. However, if the Plan includes a Limited Scope Health Flexible Spending Account and unless otherwise prohibited under